Thanks to dayglored for the heads up!
Apple FUD Season Has Started
Ping!
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Posted on 08/28/2016 1:14:18 PM PDT by Swordmaker
Executive Summary
Apple controls costs associated with purchases and workers’ in the supply chain. In manufacturing the IPhone, over 80% of materials are purchased by Apple. In addition, Apple supplies the manufacturing equipment whilst factories only purchase cases, screens, circuit boards, packaging and other materials. In the assembly department, labor costs include workers’ costs which are calculated according to the minimum wage standard for the region. in addition to management fees for the factory. Since Tim Cook became CEO of Apple, the company has required suppliers to not only increase their productivity but to also decrease costs at a rate between 5% to 10% every year. This has fostered competition between suppliers in decreasing costs.
According to Apple’s official report on their earnings in 2015, total revenue amounted to $233.7 billion USD. Net profit was a total of $53.4 billion USD, 22.85% of total revenue. In China, Apple received $58.17 billion USD in revenue, which is 25.12% of total revenue in 2015. From this, Apple earned $13.4 billion USD in profits, however, the total base wages of the 1.6 million workers amounted to less than $6.2 billion USD. This is less than half of the profits Apple earns in China.
Pegatron is one of Apple’s major suppliers, employing almost one hundred thousand workers3 in Mainland China. Working conditions are terrible, and workers are subject to terrible treatment. Currently, Apple’s profits are declining, and the effects of this decline have been passed on to suppliers. To mitigate the impact, Pegatron has taken some covert measures to exploit workers. This report is based on interviews with Pegatron workers and a comparative study of 2015 copies of paystubs collected in 2015 and 2016. Through our investigation, we have found that Pegatron has taken some surreptitious measures to pass Apple’s audits. In addition, we discovered that Pegatron’s working conditions have worsened in 2016 compared to 2015.
This is an excerpt, read more at: China Labor Watch, (requires PDF reader).
I like the way they compare factory wages of young people working for Pegatron against the entire averaged incomes of the population of Shanghai, the richest city in China, which would include the incomes of all the people in the upper classes.
Another little ploy they use is to compare that 44% of the US's GNP is from labor but only 11% of Apple's supply chain's costs are labor, ignoring that the supply chain essentially 100% manufacturing while the US has moved to an almost 80% service economy and only 8.8% of the US labor force only 8.8% is in manufacturing.
Their specious claims that Apple is demanding that Pegatron reduce "Costs" 5% to 10% every year and that the manufacturers, including Pegatron, have to purchase the "cases, screens, circuit boards, packaging and other materials" show that China Labor Watch does not understand at all what contract assemblers such as Pegatron and FoxConn even DO. Pegatron does not purchase ANY of those things for Apple, Apple purchases them. Pegatron is an ASSEMBLER. Screens are purchased under contract by Apple from other companies in their supply chain. Similarly, Circuit boards are purchased by Apple who has designed them and had the manufactured to their specifications, as are all of the other components, from other Apple suppliers in the supply chain. The packaging is shipped to Pegatron under 'Just in time' inventory control originally designed by Tim Cook, from another contractee.
There is zero evidence that Apple is forcing 5% to 10% cost cutting on Pegatron. Apple is a strong negotiator creating strong competition with suppliers for materials and can frequently get huge quantity discounts on materials and supplies that will be assembled in those amounts one sees in the industry press by playing one supplier against another. Apple applies pressure on Pegatron and FoxConn to MEET the needs of their workers, not cut their wages.
The Cases are indeed manufactured at Pegatron from materials supplied by Apple on computer controlled mills purchased and owned by Apple but operated by Pegatron employees. Pegatron has contracted to assemble all of these supplies Apple provides to Pegatron.
CLW also makes a big deal of there being little overtime for the production staff in the "off season" which is obviously the month of March. . . but lots in maintenance. March is the month when the assembly lines are down for retooling for the new models which will go into production for September release. Obviously the production workers can't work overtime when the assembly lines are down, being retooled.
They are NOT purchased by Pegatron and then the finished product is not sold by Pegatron to Apple, Apple owns the inventory at all steps as it moves through the process. Pegatron sells MANUFACTURING and ASSEMBLY SERVICES under contract.
The CLW then compares Tim Cook's approximately $400 million FIVE YEAR stock maturity bonus which finally vested on the fifth anniversary of his being named CEO of Apple, which is not a cash grant, with the Pegatron workers' total pay, as if that vested stock grant could have been distributed. That stock value was EARNED by Cook by increasing the value of the company over his term as CEO. The value represented by those certificates does not come out of the coffers of the company at all. If he were to sell that stock, it comes out of the money IN THE MARKET. Right now, it's merely pieces of paper with imputed value. Apple spent ZERO dollars to give it to him. All that happened was that the outstanding stock of all the millions of other stockholders was diluted a itty bit and no one would even notice that small amount in the increased value he's added to their stock.
The implication of this is that Apple owns Pegatron. It doesn't. Pegatron and FoxConn are independent companies, contracting with Apple which is merely one of the numerous companies that Pegatron and FoxConn contract to manufacture Consumer Electronic products for. Between the two companies, they manufacture and/or assemble more than 70% of the world's consumer electronics devices for brand names such as:
- Acer Inc. (Taiwan)
- Alcatel (France)
- Amazon (United States)
- Apple Inc. (United States)
- Archos (France)
- ASRock (Taiwan)
- Asus (Taiwan)
- Barnes & Noble (United States)
- BenQ (South Korea)
- Blackberry (Canada)
- Cisco (United States)
- Dell Inc.(United States)
- EVGA Corporation (United States)
- Fujitsu (Japan)
- GE Thomson
- Google (United States)
- Griffin Technologies (United States)
- Gründig Mobile (Germany)
- Hewlett-Packard (United States)
- HTC (Taiwan)
- Huawei (China)
- Intel (United States)
- IBM (United States)
- Kyocera Communications (Japan)
- Lenovo (China)
- Lenovo/Motorola Mobility (China)
- LG Lucky GoldStar (South Korea)
- Microsoft (United States)
- Microsoft MSI (Taiwan)
- Motorola Communications (United States)
- NCR (United States)
- NEC Casio Communication (Japan)
- Netgear (United States)
- Nintendo (Japan)
- Nokia Oyj (Finland)
- PackardBell (Netherlands)
- Panasonic (Japan)
- Philips (Netherlands)
- Pioneer Electronics (Japan)
- Samsung (South Korea)
- Sanyo (Japan)
- Sharp (Japan)
- Siemens (Germany)
- Sony (Japan)
- TCL Communication Technology (China)
- Telefunken (Germany)
- Thomson (France)
- Toshiba (Japan)
- Vizio (United States)
- Xiaomi (China)
- Zoostorm (New Zealand)
- ZTE (China)
All of the above are among the over 500 companies that have contracted with Pegatron and FoxConn to assemble their products.
Thanks to dayglored for the heads up!
The latest Apple/Mac/iOS Pings can be found by searching Keyword "ApplePingList" on FreeRepublic's Search.
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Those poor people are already committing suicide over working conditions and this scumbag wants them to work harder for less.
Anyone with a Apple phone should be ashamed.
Oh now dont you know such talk is all FUD because ....something, something....new iPhones?
That’s all that’s important are the iPhones, man! Dont you know that all we have to live for?!
Timmy needs to up those sliding profits so he can give more to the Dems.
Shocking, just shocking, that people aren’t boycotting Blackberry, Cisco, Dell, Google, HP, Intel, IBM, Lenovo, LG, Microsoft, Motorola, NEC, Netgear, Nintendo, etc., etc,... oh of the course the big offender Samsung. Shocking, that there is a bias that goes after one company (Apple) that is not as exploitive as Samsung and the others.
They’re supposed to decrease their costs by 5 to 10% every year, so in 10 to 20 years they’re supposed to be making these things for free?
I don’t know anything about Tim Cook, but I will wager that he is a bleeding heart Hillary supporter.
My companies makes chips for Apple. A large number.
And yes, we are basically owned by Apple. We give them everything they want.
It’s foolish to think Apple is a great American company. I’ve worked in this industry 21 years now. American supplies hate working with them, but bend over backwards for them just for the money.
At one time in my career(Tech) I worked a lot with a facility in Brazil, west of Rio de Janero. The company one of the largest, most profitable companies in the world(and still is). The workers were very sharp and well educated but not paid very well.
They always feared losing their jobs. Constantly reminded they could always be replace. Was always asking me to send an email when I complimented them on something they did for me.
They were the nicest people, but rarely told anything positive. Probably because their brazilian managers were also always afraid of being replaced.
At the same time, I was working with tech people in India, at a facility of the same company. Same story, not really compensated for what they were worth...always fearful of losing their job.
Go Trump!!
Perhaps the owners of your company need to read "The Art of the Deal" and negotiate a better deal, or go elsewhere. I don't think Tim Cook is as good as Trump at making deals. Why are you working for such a company? Answer - steady income, as long as Apple is buying your products you are employed. Same situation applies to any provider of services for any company, not just for Apple. Negotiate a better deal or don't accept it.
If they are SO bad as a customer, fire them. Go win other customers.
I get so tired of whiners about how tough it is to win in free markets.
It reminds me of many of the immigrants I’ve worked with from France, India, Russia and elsewhere — they yearn for the old country where everybody had a job, you didn’t have to work hard, work hours where short during the week, fantastic benefits and social safety net. Yet they still come to the United States. Why?
Free markets and capitalism are brutal, no doubt about it. You either beat the competition or go out of business (unless you get the government to keep you afloat with subsidies).
Ohhhhh yes, in fact Cook is holding a big fundraiser for Shrillary. He is homosexual and an ultra lib.
Slap a 30% tariff on all imported electronics.
This is the only post I have ever read that understands CM services... Which happens to be my field of employment.
Marx was a free trader too..
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